Mumbai: Ad spend for OTC healthcare brands in 13 key markets, including India, will grow by 7.6% in 2022 and 5% in 2023, according to Zenith’s new Business Intelligence – OTC Healthcare report published on Monday. Digital will account for 49% of OTC advertising in 2023, up from 46% in 2021, according to the report.
By 2023, OTC ad spend is expected to be 36% higher than it was in 2019 before the pandemic. This growth will be driven by brands’ personalized digital advertising, as well as performance advertising driving traffic to OTC e-commerce platforms. The report projects that over-the-counter healthcare ad spending will grow from $20.1 billion in 2021 to $22.7 billion in 2023, far exceeding the $16.7 billion spending level in 2019.
OTC brands are expected to grow their digital ad spend at an average rate of 11% per year between 2021 and 2023, while radio grows 5%, TV 3% and magazines decline 3%, according to the Zenith forecast. The 13 markets included in the report, besides India, are Australia, Canada, China, France, Germany, Italy, Poland, Russia, Spain, Switzerland, UK United States and the United States, which together account for 74% of total global ad spend. The report covers non-prescription drugs and remedies, including cold and allergy remedies, contraception, digestive care, eye care, oral care, pain relief, skin care , sleeping pills, smoking cessation aids and wound care.
“The pandemic has focused consumers’ attention on their health and disrupted their reliance on traditional OTC distribution channels,” said Jonathan Barnard, head of forecasting at Zenith. “Brands will continue to increase their investments in digital advertising as the rise of e-commerce gives it a greater role in driving OTC and brand sales growth.”
OTC advertising has increased throughout the pandemic. OTC ad spend increased 6.8% in 2020, while the market as a whole declined 3.5% as health messages gained relevance to consumers. Demand for cold and flu remedies fell sharply as social distancing reduced their transmission, but most other subcategories continued to grow and sales of sleep aids soared. When the pandemic hit, brands in many categories reduced or even ceased communications, fearing that their messaging would no longer be appropriate, or in some cases counterproductive in the new context. This has given OTC brands the opportunity to use many inexpensive media to boost their contribution to consumer health and well-being.
OTC advertising then increased by 12.8% in 2021, although in this case its growth was slightly lower than that of the overall market, which had lost ground to catch up. Zenith expects OTC advertising growth to remain healthy over the next two years as brands defend their price premiums and e-commerce platforms compete for dominance.
OTC has lagged the market as a whole in embracing e-commerce, but lockdowns and other restrictions have led to a leap forward in OTC e-commerce in 2020. Now that more and more consumers are aware and aware comfortable with the ability to purchase OTC products online, it will become an increasingly important sales channel over the next few years. This means that traditional distributors such as pharmacies and supermarkets face new competition from digital e-commerce platforms, and brands have new opportunities to launch new partnerships or even direct-to-consumer businesses. Increased competition for traffic and sales will fuel the continued growth of brand and performance advertising.
Going digital helps brands tailor messaging to specific consumer needs
When consumers first purchase an over-the-counter product, they often spend time researching the purchase and discussing it with family, friends, and trusted advisors like pharmacists. However, after the first purchase, buying OTC products quickly becomes routine, becoming part of the usual shop. The fundamental role of OTC advertising is therefore to maintain brand awareness at the point of purchase, much like FMCG advertising. Likewise, over-the-counter healthcare makes heavy use of television for its massive, high-impact reach. OTC advertisers spent 38% of their budget on TV advertising in 2021, compared to 21% for the average advertiser across all categories. OTC brands are also spending more on radio and magazines – radio for its mass reach and magazines for their high impact.
Until recently, it was difficult to use digital advertising to create emotional connections and lasting brand awareness. The rise of high-quality advertising environments, online video and retailer media – advertisements that appear on retail websites and e-commerce platforms – means brands can use digital to effectively convey the values of the mark until the sale. Brands are also spending more on performance advertising as OTC e-commerce expands.
“The continued shift to digital allows OTC brands to use smart segmentation and dynamic creativity to market the same products to different people with different needs, within the regulations of digital advertising in this category,” said said Benoit Cacheux, global digital director of Zenith. “The gym goer with sore muscles, the office worker with headaches, and the parent whose child has growing pains all need pain relief, but brands need to talk to them. in different ways to persuade them as effectively as possible. This ability to tailor creative to audience needs gives digital advertising an edge that traditional media never had. »